In Canada you can borrow against your government sponsored pension saving to buy your first home. Then I thought instead of borrowing against your RRSP to buy a home why not get a low or no interest loan from the government. The infrastructure is already in place with Revenue Canada, the logistical costs would be tiny. Nationalize one bank. Then get your mortgae from that bank. The rates would be much lower and all your interest pays for things like health care, education, pensions and infrastructure. This one bank can then compete with all the other banks.

Why is this not an amazing idea when all our governments are drowning in debt?

Nemo wrote:Why is this not an amazing idea when all our governments are drowning in debt?

Because it will halt the growth of the non nationonlizd banks. They won't be able to compete with those rates, so who in their right mind would do business with them? Then you have people with a better interest rate, helping individuals and helping the economy yes, but on the flip side, you hurt a lot of banking institutions, which hurts a lot of employees. A lot of banks will go out of business, people lose their jobs, can't pay a loan that they have even a good rate on, etc. Other banks will cut back on employees out of necessity this translates into less care for the customer, and usually less wage increases for employees. It suffocates the private banks.

In a couple of decades you will have a culture where the small banks simply can't compete with government incentives given by the government bank, since the government can redistribute monies from other sources as well to bring down their own rates even more if need be. At that point, the government essentially has a hold on the whole market, and when the majority of the smaller banks die off, you don't have any alternatives, you have to pay their rate, whatever it may be, and they will be raised gradually, since it's a back door way of taking in money without raising taxes.

Nemo wrote:Why is this not an amazing idea when all our governments are drowning in debt?

Because it will halt the growth of the non nationonlizd banks. They won't be able to compete with those rates, so who in their right mind would do business with them? Then you have people with a better interest rate, helping individuals and helping the economy yes, but on the flip side, you hurt a lot of banking institutions, which hurts a lot of employees. A lot of banks will go out of business, people lose their jobs, can't pay a loan that they have even a good rate on, etc. Other banks will cut back on employees out of necessity this translates into less care for the customer, and usually less wage increases for employees. It suffocates the private banks.

In a couple of decades you will have a culture where the small banks simply can't compete with government incentives given by the government bank, since the government can redistribute monies from other sources as well to bring down their own rates even more if need be. At that point, the government essentially has a hold on the whole market, and when the majority of the smaller banks die off, you don't have any alternatives, you have to pay their rate, whatever it may be, and they will be raised gradually, since it's a back door way of taking in money without raising taxes.

Those monies will then be redistributed in other areas.

Kevin

I wasn't even thinking about a full service bank. Only mortgages on principal residences and student loans. But that can come with time.

Traditionally banking services were about 2 to 3% of GDP. They have now ballooned to 10 to 12%. This is not a productive sector like agriculture or manufacturing. It is 10% of everything skimmed off the top for providing capital liquidity without adding value. In real terms after 3% it is a parasite on the economy worse than government which at least provides services for your money. You have said that this percentage will shrink and the monies collected will be redirected to infrastructure, education, healthcare and pensions. If a few bankers have to become teachers, nurses and construction workers I still am not seeing a problem.